China is widely expected to raise its interest rates in the wake of stronger than expected inflation figures released over the weekend.

The prospects of such a move could unsettle stock markets, with commodity companies in particular likely to suffer if the country acts to dampen down demand. Inflation jumped from 4.4% in October to a 28-month high of 5.1% in November, compared to forecasts of 4.7%. The increase was driven by an 11.7% jump in food prices.

Before the figures were released, China had already acted to tighten monetary policy by increasing the reserve requirements for its banks. This was prompted by stronger than expected trade data released on Friday, which showed Chinese exports rising by 34.9% in November, while imports climbed by 37.7%. But the strong inflation numbers suggested more action was required, said economists. Others suggested the November figure could represent a peak.

State radio today reported comments from an annual economic conference confirming a shift from a "loose" monetary policy stance to a "prudent" one, which seemingly paves the way for a rate rise.

"The priority is to actively and properly handle the relations between maintaining steady and relatively fast economic growth, economic restructuring and managing inflation expectations," said a statement from the conference. "Strategic economic restructuring will be accelerated and stabilising price levels will be given a more prominent position."

Analysts said the high level of Chinese inflation could lead to higher prices in the UK for goods produced in the country.